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In case you missed it - March 2013

You can view archived issues of this alert, as well as other alerts, here. If you have comments, email us at MissedIt@stoel.com.

The normally neutral Swiss, historically unperturbed by fascists and neighboring warmongers, recently decided that who they really hate are rich executives, so they adopted a referendum requiring binding shareholder votes on executive pay. News about the referendum, which may take some time to work its way into Swiss law, is here, here, here and here. Although we haven’t gone quite so far in the U.S., ICYMI noted last month the increased litigation risk associated with (inadequate) say-on-pay disclosure. Additional commentary on this topic is here.

Nasdaq proposed, here, a new requirement that listed companies maintain an internal audit function. This should sound familiar because the requirement mirrors NYSE standard 303A.07(c), here, which has been around for close to a decade.

Warren Buffet’s eagerly awaited annual letter to shareholders, which many read for his insights into the world generally and some just because it’s folksy, is here.

The joint 2013 Director Compensation and Board Practices study by the Conference Board, Nasdaq OMX, and NYSE Euronext is available here.

The PCAOB recently published a report that notes "trends" toward better auditing but continuing problems among smaller auditors, here, and smacked PricewaterhouseCoopers, here, for failing to remediate quality issues flagged by the PCAOB back in 2008/2009. The PCAOB published a portion of the "Part II" comments from its original reports on PWC here and here.

ISS may be looking at your proxy statement this year to check on whether or not you have an anti-pledging/hedging policy that applies to company insiders. A few companies have adopted or publicized policies to ward off a "no" or "withhold" recommendation on the directors ISS considers responsible for failing to adopt a policy, which might mean Governance Committee members or all directors. A few resource materials as you grapple with this:

It is occasionally useful to be reminded (pay attention) of how good the SEC and others are at uncovering insider trading (see, e.g., here), but knowing what is actually illegal can be somewhat nuanced, as evidenced by the long-running SEC suit against professional jerk, amateur dancer, and publicity hound Mark Cuban (see here and here). Of course, it’s also worth remembering that it’s perfectly fine to use even obscure public information to make money and ruin iffy companies. See, e.g., here.

Finally, we would be remiss for failing to note the U.S. Supreme Court action in two (count ’em, two) securities law cases:

Amgen, Inc. v. Connecticut Retirement Plan and Trust Funds, here, resolved a Circuit Court split and lowers the bar for plaintiff classes, at least in some Circuits, by holding that allegations, rather than proof, of materiality are sufficient for class certification. Dicta in concurring and dissenting opinions by four Justices, however, leads some to speculate that the "fraud-on-the-market" theory established in Basic v. Levinson is ripe for change, which would be a basic change indeed. ("Basic". . . Really? Nothing?) Commentary on the case is here, here, here, and here.

Gabelli v. SEC, here, says the five-year statute of limitations on SEC enforcement actions runs from the time of the violation, not from when the SEC discovers or reasonably should have discovered the violation.